As we enter 2025, the Australian economy is focused on potential changes to interest rates.
With the Reserve Bank of Australia (RBA) and major banks signalling possible rate cuts, now is a critical time for homeowners and prospective buyers to stay informed. Here’s what the forecasts reveal and how it might impact you.
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Economic Insights and Interest Rates.
Financial markets and economists are weighing in on potential rate cuts, with market pricing suggesting the first cut around April 2025. Some analysts, including those from AMP, anticipate up to three rate reductions within the year. Key factors influencing these projections include:
Inflation: Headline inflation has eased to 2.8%, within the RBA’s target range. However, underlying inflation remains at 3.5%, above the desired 2-3% band.
Economic Data: Employment figures and consumer spending patterns are under scrutiny as the RBA evaluates its next steps.
Global Conditions: International economic volatility continues to play a role in the RBA’s cautious stance.
Current Landscape
The cash rate remained steady at 4.35% as of December 2024, unchanged since November 2023. The RBA has indicated greater confidence in its forecasts but remains careful in signaling when and how cuts might occur.
Impacts on Homeowners
Mortgage holders continue to face a financial strain, with the average new mortgage reaching $642,121 in September 2024, according ot the ABS. While a reduction in interest rates could alleviate some pressure, experts also warn of potential increases in property prices due to heightened market activity.
What This Means for You
Although the timing of rate cuts is uncertain, the general consensus is that relief could begin in the first half of 2025.
This could present opportunities for homeowners to review their financial strategies, including refinancing or locking in competitive rates.
Let’s Talk About Your Options
Understanding how these changes might affect your financial situation is essential.
Contact us today to review your current interest rate and explore strategies to prepare for 2025.
Together, we can ensure you’re ready to make the most of the opportunities ahead.
Perth: Rising Dwelling Values and Cost of Living Insights
Perth's property market continues to grow, with dwelling values increasing by 4.7% during the September quarter of 2024.
This surge brings the median dwelling value to $797,184, positioning Perth ahead of Melbourne in the property value rankings (Source: CoreLogic).
For renters, the cost of living in Perth remains a significant consideration. A furnished 85m² apartment in an upscale area costs approximately AU$3,994 per month, with utilities for two people adding an extra AU$261 (Source: Numbeo).
To help alleviate financial pressures, the Western Australian Government announced $762 million in cost-of-living support in its 2024-25 State Budget.
This includes a new $400 Household Electricity Credit aimed at providing relief for families struggling with rising expenses (Source: WA Government Budget Report).
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